TIDMILV2
RNS Number : 6968J
Ingenious Live VCT 2 plc
06 April 2010
For immediate release
6 April 2010
INGENIOUS LIVE VCT 2 plc ("the Company")
STATEMENT OF ANNUAL RESULTS
For the year ended 31 December 2009
CHAIRMAN'S STATEMENT
I am delighted to present the Company's third annual report covering the year to
31 December 2009 (the "Reporting Period").
The Company has now completed its investment strategy and is fully invested
under the VCT regulations. We will now focus solely on maximising the returns
from these investments. 2009 proved to be a very successful year, indicating
that the strategy of identifying investments that deliver both annual profits
and capital value is beginning to deliver success.
I am pleased to report that the Company enjoyed a successful summer season with
its three main festivals all making significant profits.
Creamfields sold out for the first time in its history and won 'Best Dance
Festival' at the prestigious Virtual Festival Awards. This was accompanied by
record numbers for Underage and Field Day as well as the 80's Rewind event
having an exceptionally strong first year and achieving a good level of
profitability.
The one event that performed below expectations was the two day Powderham Music
Festival. The event incurred a loss for the second year and it has been decided
not to stage the event in 2010.
The Reporting Period has been dominated by new investments, with GBP3,203,000
invested and committed to Qualifying Investments. The Company made a profit on
ordinary activities of GBP104,000 in the year to 31 December 2009 (2008: profit
of GBP33,000). The Company's net asset value moved in line with the profit on
ordinary activities, from 96.0 pence (2008) to 97.1 pence per share. The
Directors do not recommend the payment of a dividend in respect of the Reporting
Period. The increase in the net asset value was impacted by two key factors; an
increase of 3.8 pence per share to reflect the increase in asset values of the
Qualifying Investments which was partially offset by a decrease of 2.7 pence per
share in relation to the Company's cost base which exceeded interest revenues
and other gains generated during the year.
The Company is now three years old and we believe that it has a strong portfolio
of investments which has the potential to deliver significant upside from its
equity interests, while maintaining its downside protection through its minimum
revenue arrangements to cover in excess of 75% of the Company's investment in
certain instances.
Since the end of the financial year the Company has declared an interim dividend
of 7.0 pence per share for the year to 31 December 2010. It has been proposed
that the dividend is paid on 13 April 2010.
I would like to take this opportunity to thank all Shareholders for their
continued support of the Company and I look forward to seeing those of you that
are able to attend the AGM, scheduled for 13 May 2010.
Patrick McKenna
Chairman
1 April 2010
MANAGER'S REVIEW
Investment Objective
Our objective is to invest in a portfolio of live event companies engaged in the
production of new and established events which will provide Shareholders with an
attractive return. This will be achieved by maximising the opportunities for
making tax-free dividends to Shareholders from both the income received and
capital profits on the sale of the Investee Companies or their assets.
The Reporting Period has seen strong deal flow throughout, leaving the Company
fully committed ahead of the three-year deadline. We have focused our efforts
throughout the Reporting Period on identifying projects that have the potential
to deliver strong returns for our investors. The Manager will now focus solely
on the portfolio of investments in order to deliver strong annual profits, and
crucially, target exceptional back-end values as the Company exits its
investments after the qualifying five-year period.
Underage And Field Day Festivals
Following the success of 2008's Underage and Field Day festivals, the Company
agreed to provide further funding of GBP175,000 (GBP350,000 across both the
Ingenious Live VCTs) to co-promote the third year of the festivals. This brings
the total investment made in the festivals to-date to GBP500,000 (GBP1,000,000
across both the Ingenious Live VCTs).
In August 2009, the events returned to Victoria Park, London for a third time.
Underage attracted an impressive line up of artists including The Horrors, The
Pigeon Detectives, Kissy Sell Out, Ladyhawke, Tinchy Stryder, Marina and the
Diamonds, Mystery Jets and Patrick Wolf whilst Field Day resumed the charm of a
village fête and featured artists including Little Boots, Mogwai, Santigold
amongst many others. Field Day sold 18,000 out of its 20,000 capacity and
Underage attracted 8,000 attendees. We are pleased to report that the Underage
festival has fast become the flagship summer music event for under 18 year olds
in the UK.
The Victoria Park site was also rented this year for a third independent event -
a concert by the world famous DJ Tiesto, which also contributed to the event's
positive financial performance.
The weekend delivered strong profitability and we believe that it can continue
to build upon this success with increased capacities (Underage 10,000/Field Day
25,000) in 2010.
We believe that the Underage and Field Day brands both have strong potential to
be 'rolled out', both in the UK and overseas. This would also assist in the
creation of an enhanced capital value for the events which is key to our
investment strategy.
Creamfields
In July 2008, the Company agreed an investment of GBP850,000 (GBP1,700,000
across both the Ingenious Live VCTs) to back the second day of leading dance
music festival Creamfields. The event, held on 29-30 August 2009, boasted an
impressive line up of DJs and electronic acts and included performances from
David Guetta, Calvin Harris and Dizzee Rascal. Each of these artists had singles
in the Top 5 of the UK charts at the time of the festival with two of them
sharing number one on the same Sunday. The 2009 event proved to be the most
successful Creamfields weekend in its 11 year history by not only selling out
well in advance its 60,000 capacity attendance, but by also being crowned 'Best
Dance Event' at the Annual UK Festival Awards 2009.
Tickets are already on sale for the 2010 event where we are seeking to expand
the capacity to 40,000 for each of the two days. An impressive line up of
artists and DJs is headlined by Leftfield, Deadmau5, David Guetta, Eric Prydz
amongst many others. Creamfields has established itself as arguably the world's
leading dance festival, and is the only music festival concept to be
successfully exported globally with events staged in over 12 countries.
The Rival Organisation - Powderham Castle
July 2009 saw the second staging of the Powderham Castle Music Festival
featuring Status Quo and The Greatest 80's Party Ever! on consecutive nights.
The event saw over 10,000 people attending across the two nights but, as with
2008, the level of interest was insufficient to generate a profit.
We have discussed the potential of the event with our promoter and have decided
not to proceed with the Powderham Castle Music Festival for 2010.
The Rival Organisation - 80's Rewind Festival
In December 2008, the Company made an investment of GBP272,598 (GBP1,090,390
across the Ingenious Live VCTs and the Ingenious Entertainment VCTs) to
co-promote the 80's Rewind Festival in conjunction with The Rival Organisation.
The 80's Rewind Festival is a two-day music festival held in August in
Henley-upon-Thames.
The event attracted in excess of 26,000 people across the weekend with a line up
including Kim Wilde; Rick Astley; Bananarama; Billy Ocean; Belinda Carlisle; Kid
Creole and the Coconuts; Heaven 17; Toyah; Gloria Gaynor; Sister Sledge; ABC;
Paul Young; Go West; Midge Ure; Nik Kershaw; T'Pau and Chas 'n' Dave. We are
delighted to say that exceptionally, the event made a strong profit in its first
year.
Tickets for the 2010 event to be held between 20-22 August are on sale and
selling well already. The 2010 line up includes Boy George; Tony Hadley; Heaven
17; ABC; Level 42; Altered Images; Marc Almond; Odyssey; Jimmy Somerville; The
Weather Girls; Chesney Hawkes; Kajagoogoo; Kid Creole and the Coconuts; 10cc and
Rick Astley.
Brand Events - Taste Of Christmas
In September 2008, the Company agreed an investment of GBP902,488 (GBP1,804,977
across both the Ingenious Live VCTs) to co-promote Gordon Ramsay's Taste of
Christmas, a festive food event, alongside event management company Brand
Events. The festival was held from 4-7 December 2008 at ExCel London, attracting
over 22,000 food lovers and featuring live demonstration cookery master classes
by Gordon Ramsay and other celebrity chefs, cookery seminars, guest interviews,
audience participation, wine and spirit tasting classes and over 250 food, drink
and gift exhibitors.
Taste of Christmasreturned to the ExCel London between 4-6 December 2009 and
attracted over 26,000 customers. Top chefs including Heston Blumenthal, Anthony
Worrall Thompson and many others were joined by 150 food and wine producers for
three days of winter feasting. Building on the success of the summer Taste
event in Regents Park, we believe there is a strong potential for this event to
be 'rolled out', both in the UK and overseas. This would also assist in the
creation of an enhanced capital value for the events which is key to our
investment strategy.
Let's Dance
The second co-investment between the Ingenious Live VCTs and the Ingenious
Entertainment VCTs, saw the Company invest GBP500,000 (GBP2,000,000 across the
Ingenious Live VCTs and the Ingenious Entertainment VCTs) in January 2009 to
back an exciting new entertainment format, Let's Dance, which was commissioned
by the BBC for Comic Relief.
The programme, hosted by Claudia Winkleman and Steve Jones, saw some of the
nation's favourite celebrities paying homage to iconic dance routines. Over its
four week run on Saturday evenings on BBC One in February and March 2009 the
show's ratings increased week on week peaking at 8.6 million viewers for the
final. This was a terrific result for a new series and the show has now been
sold and aired in Holland and Germany and has received strong ratings in both
territories.
We are pleased to report the show was recommissioned in the UK by the BBC in
2010 as Let's Dance for Sports Relief. A host of sport celebrities and comedians
including the winner Rufus Hound took to the dance floor in an effort to beat
Robert Webb's 2009 winning performance of 'Flashdance' and the viewing figures
for this series peaked at 8.0 million for the final.
The Ingenious Live VCTs and the Ingenious Entertainment VCTs own 50% of the
international format rights which are being represented by Fremantle Media who
produce programming in numerous territories around the world. We firmly believe
that a second UK airing will lead to increased international interest and will
drive further format revenues for the Company.
Taste Festivals
In April 2009, the Company made an investment of GBP1,000,000 (GBP2,000,000
across both the Ingenious Live VCTs) to co-promote with Brand Events the Taste
Festival in London's Regents Park. Established as a must-attend event of the
summer season, Taste of London will return to Regents Park from the 17-20 June
2010.
In 2009, famous chefs including Gary Rhodes and Anthony Worrall Thompson served
up their signature dishes for the public to taste. This year, some of the most
acclaimed London restaurants will gather at this atmospheric open air festival
and the public will be given the opportunity to sample their most delicious
signature dishes, discover new wines and recipes, shop for gourmet ingredients
and mingle with top celebrity chefs.
Annie Get Your Gun
In November 2009, the Company made an investment of GBP252,500 (GBP505,000
across both the Ingenious Live VCTs) to co-produce Annie Get Your Gun with The
Young Vic Theatre. Staging classic hit songs such as 'Anything You Can Do' and
'There's No Business Like Show Business', the production starred Jane Horrocks
in the lead role as Annie Oakley and launched to strong critical acclaim.
The show has now come to the end of its term with the investment making a small
profit and we are now looking at further opportunities to roll out the brand in
other areas.
Golf Live
The third co-investment between the Ingenious Live VCTs and the Ingenious
Entertainment VCTs, saw the Company fund GBP275,000 (GBP1,100,000 across the
Ingenious Live VCTs and the Ingenious Entertainment VCTs) in December 2009 to
co-promote a three-day new interactive golf event known as 'O2 Golf Live'. The
event is to be staged at Stoke Park in Buckinghamshire from 14-16 May 2010. It
is a brand new concept and addition to the golfing calendar, which we believe
has excellent potential to be rolled out at prestigious golf courses around the
world.
This unique event will deliver unprecedented access to the world of golf, with
attendees able to 'get inside the heads' of some of the world's best players
including Colin Montgomerie, Paul Casey, Retief Goosen and Ian Poulter in their
own masterclass theatres. Visitors will also be able to enjoy intimate access to
a three hole pro/celebrity tournament, test the latest kit and equipment from
the best brands, receive expert tuition from world renowned PGA professionals
and compete against other visitors at the hole-in-one challenge.
Scarborough Open Air Theatre
In December 2009, the Company agreed an investment of GBP1,000,000 (GBP2,000,000
across both the Ingenious Live VCTs) to enter into an exciting new project to
co-promote events with Apollo Resorts and Leisure. The open air theatre in
Scarborough is set to be the largest open air theatre venue in Europe.
Originally opened in 1932, major restoration works are taking place as part of
the North Bay Project to reinstate the theatre.
The theatre which seats up to 8,000 people is scheduled to open in August 2010,
and is set to become a major venue in the North East of England for a wide
variety of live events. Major shows are presently being planned and in the near
future we expect to announce the exciting acts and performances that will take
to the Scarborough stage later this year.
Outlook
The volatile economic environment presents challenges for the Company as
consumers become more cautious about their discretionary spending on
entertainment. However, we are confident that our portfolio of live events is
sufficiently robust to withstand the economic factors facing the industry for
the following reasons.
Firstly, in times of recession, strong brands gain greater market share whilst
weak brands of lower quality often disappear. With brand names such as
Creamfields, which enjoyed its eleventh anniversary year last summer, and
Underage which is becoming the flagship summer music event for under 18 year
olds in the UK, we believe that our investments remain compelling,
well-organised and brand-focused live events.
Secondly, our investments are backed by management teams with vast experience in
the live events sector. For example, Brand Events, the event production company
behind Taste of Christmas, Taste Festivals and Golf Live, has experience of
managing multiple international events including the Top Gear Live shows and the
Taste food festivals.
Contact
If you have any questions on this review or would like to speak with a member of
the management team, please do not hesitate to contact us on 0207 319 4000.
Ingenious Ventures
1 April 2010
BUSINESS REVIEW
The purpose of this review is to provide Shareholders with a summary setting out
the business objectives of the Company, the Board's strategy to achieve those
objectives, the risks faced, the regulatory environment and the key performance
indicators (KPIs) used to measure performance.
1. Strategy For Achieving Objectives
Ingenious Live VCT 2 plc is a tax efficient company listed on The London Stock
Exchange.
The investment objective is to achieve a combination of a high degree of
downside protection in an otherwise potentially high risk proposition and
long-term capital growth, maximising distributions in order to take advantage of
tax-free dividends.
The Board has delegated day-to-day investment management and administration of
the Company to Ingenious Ventures under the terms of a management deed.
The Manager's review provides a review of the investment portfolio and the
market outlook.
2. Investment Policy
The Company's investment policy is to invest in Investee Companies that will
produce and promote new and established Events whose revenues will be
underpinned by warranties or other similar contractual arrangements. The
Ingenious Live VCTs will invest in Investee Companies which are expected to
participate in the revenues and growth of Events. The Events produced and
promoted by the Investee Companies are likely to be held primarily in the UK and
may include concerts, festivals, exhibitions, theatrical shows, conferences,
trade fairs and sporting events.
The Company will only invest in an Investee Company:
· where the Event has been approved by the Manager through its selection
process; and
· where the Investee Company has obtained performance warranties or similar
contractual arrangements that will provide for the Investee Company to receive
minimum revenues equivalent to at least 70% of the Company's investment,
although the Manager is currently endeavouring to secure higher levels of
minimum revenues in the current economic environment.
The initial capital required by an Investee Company will be provided by the
Company. The majority of this initial capital will be provided through loan
finance which should provide additional capital protection. The Company can
invest, under current venture capital trust legislation, up to GBP1million per
tax year in any one Investee Company.
The Company has the flexibility to retain up to 30% of its assets in cash and
cash equivalent instruments which the Directors believe should provide a
significant degree of downside protection whilst preserving the upside potential
of the Events within the portfolio.
At 31 December 2009 the Company had made ten investments in Qualifying
Companies, with contractual arrangements that provide for the Investee Company
to receive minimum revenues equivalent to at least 70% of the Company's
investment, all of which had received the prior approval of the Manager's
Investment Committee.
3. Principal Risks, Risk Management And Regulatory Environment
The Board believes that the principal risks faced by the Company are:
· Investment and strategic - the performance of an investment in an Event
is tied to a certain degree to the fortunes of the industry generally. In
particular, there is a risk that the Company will not identify opportunities
where the commercial success of the Event is sufficient to earn revenues over
and above the minimum contractual income negotiated.
· Loss of approved status as a Venture Capital Trust - the Company must
comply with section 274 of the ITA which allows it to be exempted from capital
gains tax on investment gains realised by Shareholders. Any breach of these
rules may lead to the Company losing its approval as a VCT, qualifying
Shareholders who have not held their shares for the designated holding period
would have to repay the income tax relief they obtained and future dividends
paid by the Company would become subject to tax. The Company would also lose its
exemption from corporation tax on capital gains.
· Regulatory - the Company is required to comply with the Companies Act,
the rules of the UK Listing Authority and United Kingdom Accounting Standards.
Breach of any of these regulatory rules might lead to suspension of the
Company's Stock Exchange listing, financial penalties or a qualified audit
report.
· Financial - inadequate internal controls might lead to misappropriation
of assets. Inappropriate accounting policies might lead to misreporting or
breaches of regulations.
· External inherent risks - the Company's investments will be in unquoted
companies which by their nature involve a higher degree of risk than investment
in the main market due to the fact there is no liquid market and may, therefore,
be difficult to realise. Furthermore, there may be further constraints imposed
on realisations because of the requirement to satisfy certain conditions
necessary for the Company to maintain its VCT status (such as the obligation to
have at least 70% by value of its investments in qualifying holdings by the
beginning of the accounting period commencing three years after provisional VCT
approval).
The Board seeks to mitigate the internal risks by setting clear policies,
including establishing a funding structure which provides for minimum revenues
equivalent to at least 70% of the investment, regular reviews of performance,
monitoring progress and compliance. Details of the Company's internal controls
are contained in the Corporate Governance Report.
4. Key Performance Indicators (KPIs)
The primary key performance indicator on which the Board assesses the
performance of the Manager in meeting the Company's objective is the change in
net asset value per share.
A review of the Company's performance during the year, the position of the
Company at the year end and the outlook for the coming year is contained within
the Chairman's Statement and the Manager's Review.
INCOME STATEMENT
For the year ended 31 December 2009
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| | | 2009 | 2009 | 2009 | | 2008 | 2008 | 2008 |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| | | Revenue | Capital | Total | | Revenue | Capital | Total |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| |Note | GBP'000 | GBP'000 | GBP'000 | | GBP'000 | GBP'000 | GBP'000 |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| | | | | | | | | |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| Gain on disposal of | | - | 154 | 154 | | - | 87 | 87 |
| investments | | | | | | | | |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| Increase in fair | | - | 178 | 178 | | - | 141 | 141 |
| value of investments | | | | | | | | |
| held | | | | | | | | |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| Investment income | 2 | 68 | - | 68 | | 8 | 76 | 84 |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| Investment | 3 | (89) | (89) | (178) | | (80) | (80) | (160) |
| management fees | | | | | | | | |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| Other expenses | 4 | (105) | (13) | (118) | | (106) | (13) | (119) |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| | | | | | | | | |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| Profit/(loss) on | | (126) | 230 | 104 | | (178) | 211 | 33 |
| ordinary activities | | | | | | | | |
| before taxation | | | | | | | | |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| | | | | | | | | |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| Tax on ordinary | 5 | - | - | - | | - | - | - |
| activities | | | | | | | | |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| | | | | | | | | |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| Profit/(loss) on | | (126) | 230 | 104 | | (178) | 211 | 33 |
| ordinary activities | | | | | | | | |
| after taxation | | | | | | | | |
| attributable to | | | | | | | | |
| equity shareholders | | | | | | | | |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| | | | | | | | | |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| Basic and diluted | 6 | (1.4) | 2.5 | 1.1 | | (1.9) | 2.3 | 0.4 |
| return per share | | | | | | | | |
| (pence) | | | | | | | | |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
| | | | | | | | | |
+----------------------+------+---------+---------+---------+----------+---------+---------+---------+
The Company has no recognised gains and losses other than those disclosed above.
The total column is the income statement of the Company for the year. The
supplementary capital and revenue columns are prepared with guidance published
by the Association of Investment Companies ("AIC").
All operations are considered to be continuing.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 31 December 2009
+-----------------------------------------+----------+-----+--+---------+---------+
| | | | | 2009 | 2008 |
+-----------------------------------------+----------+-----+--+---------+---------+
| | | | | GBP'000 | GBP'000 |
+-----------------------------------------+----------+-----+--+---------+---------+
| Opening shareholders' funds | | | | 8,869 | 8,836 |
+-----------------------------------------+----------+-----+--+---------+---------+
| Profit attributable to equity | | | | 104 | 33 |
| shareholders for the year | | | | | |
+-----------------------------------------+----------+-----+--+---------+---------+
| | | | | | |
+-----------------------------------------+----------+-----+--+---------+---------+
| Closing shareholders' funds | | | | 8,973 | 8,869 |
+-----------------------------------------+----------+-----+--+---------+---------+
The accompanying notes form an integral part of these financial statements.
BALANCE SHEET
As at 31 December 2009
+----------------------------------------+------+----------+----------+---------+
| | | | 2009 | 2008 |
+----------------------------------------+------+----------+----------+---------+
| |Note | | GBP'000 | GBP'000 |
+----------------------------------------+------+----------+----------+---------+
| Fixed assets | | | | |
+----------------------------------------+------+----------+----------+---------+
| Qualifying investments | 7 | | 6,242 | 2,752 |
+----------------------------------------+------+----------+----------+---------+
| | | | | |
+----------------------------------------+------+----------+----------+---------+
| Current assets | | | | |
+----------------------------------------+------+----------+----------+---------+
| Debtors | 9 | | 68 | 6 |
+----------------------------------------+------+----------+----------+---------+
| Non-Qualifying investments | 10 | | 2,598 | 6,045 |
+----------------------------------------+------+----------+----------+---------+
| Cash at bank and in hand | | | 93 | 92 |
+----------------------------------------+------+----------+----------+---------+
| | | | 2,759 | 6,143 |
+----------------------------------------+------+----------+----------+---------+
| | | | | |
+----------------------------------------+------+----------+----------+---------+
| Creditors: amounts falling due within | 11 | | (28) | (26) |
| one year | | | | |
+----------------------------------------+------+----------+----------+---------+
| | | | | |
+----------------------------------------+------+----------+----------+---------+
| Net current assets | | | 2,731 | 6,117 |
+----------------------------------------+------+----------+----------+---------+
| | | | | |
+----------------------------------------+------+----------+----------+---------+
| | | | | |
+----------------------------------------+------+----------+----------+---------+
| Net assets | | | 8,973 | 8,869 |
+----------------------------------------+------+----------+----------+---------+
| | | | | |
+----------------------------------------+------+----------+----------+---------+
| | | | | |
+----------------------------------------+------+----------+----------+---------+
| Capital and reserves | | | | |
+----------------------------------------+------+----------+----------+---------+
| Called-up share capital | 12 | | 92 | 92 |
+----------------------------------------+------+----------+----------+---------+
| Share premium account | 13 | | 4,383 | 4,383 |
+----------------------------------------+------+----------+----------+---------+
| Other reserve account | 13 | | 4,382 | 4,382 |
+----------------------------------------+------+----------+----------+---------+
| Capital reserve | 13 | | 616 | 386 |
+----------------------------------------+------+----------+----------+---------+
| Revenue reserve | 13 | | (500) | (374) |
+----------------------------------------+------+----------+----------+---------+
| | | | | |
+----------------------------------------+------+----------+----------+---------+
| Equity shareholders' funds | | | 8,973 | 8,869 |
+----------------------------------------+------+----------+----------+---------+
| | | | | |
+----------------------------------------+------+----------+----------+---------+
| | | | | |
+----------------------------------------+------+----------+----------+---------+
| Net asset value (pence per share) | 14 | | 97.1 | 96.0 |
+----------------------------------------+------+----------+----------+---------+
| | | | | |
+----------------------------------------+------+----------+----------+---------+
The accompanying notes form an integral part of these financial statements.
The financial statements were approved by the Board of Directors on 1 April
2010.
Signed on behalf of the Board of Directors:
Patrick McKenna
Chairman
CASH FLOW STATEMENT
For the year ended 31 December 2009
+-------------------------------------------+------+----------+---------+
| | | 2009 | 2008 |
+-------------------------------------------+------+----------+---------+
| |Note | GBP'000 | GBP'000 |
+-------------------------------------------+------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| Net cash outflow from operating | | (288) | (190) |
| activities | | | |
+-------------------------------------------+------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| Financial investments | | | |
+-------------------------------------------+------+----------+---------+
| Purchase of qualifying investments | 7 | (3,203) | (2,589) |
+-------------------------------------------+------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| Net cash outflow from financial | | (3,203) | (2,589) |
| investments | | | |
+-------------------------------------------+------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| Management of liquid resources | | | |
+-------------------------------------------+------+----------+---------+
| Purchase of non-qualifying investments | 10 | - | (2,536) |
+-------------------------------------------+------+----------+---------+
| Disposal of non-qualifying investments | 10 | 3,492 | 5,233 |
+-------------------------------------------+------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| Net cash inflow from liquid resources | 3,492 | 2,697 |
+--------------------------------------------------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| Increase/(decrease) in cash | | 1 | (82) |
+-------------------------------------------+------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| Reconciliation of profit before taxation to net cash flow from |
| operating activities |
+-----------------------------------------------------------------------+
| | | | |
+-------------------------------------------+------+----------+---------+
| | | GBP'000 | GBP'000 |
| | | | |
+-------------------------------------------+------+----------+---------+
| Profit on ordinary activities before | | 104 | 33 |
| taxation | | | |
+-------------------------------------------+------+----------+---------+
| Gain on investments | 10 | (154) | (87) |
+-------------------------------------------+------+----------+---------+
| Increase in fair value of investments | 13 | (178) | (141) |
| held | | | |
+-------------------------------------------+------+----------+---------+
| (Increase)/decrease in receivables | | (62) | 9 |
+-------------------------------------------+------+----------+---------+
| Increase/(decrease) in payables | | 2 | (4) |
+-------------------------------------------+------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| Net cash outflow from operating | | (288) | (190) |
| activities | | | |
+-------------------------------------------+------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| Reconciliation of net cash flow to movement in | | |
| net funds | | |
+--------------------------------------------------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| | | GBP'000 | GBP'000 |
| | | | |
+-------------------------------------------+------+----------+---------+
| Opening cash balances | | 92 | 174 |
+-------------------------------------------+------+----------+---------+
| Net cash inflow/(outflow) | | 1 | (82) |
+-------------------------------------------+------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
| Closing cash balances | | 93 | 92 |
+-------------------------------------------+------+----------+---------+
| | | | |
+-------------------------------------------+------+----------+---------+
Total net funds is cash of GBP93k (2008: GBP92k) and non-qualifying investments
of GBP2,598k (2008: GBP6,045k).
The accompanying notes form an integral part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
For the year ended 31 December 2009
1. Accounting Policies
(a) Basis Of Accounting
The financial statements for the year ended 31 December 2009 have been prepared
in accordance with UK Generally Accepted Accounting Practice, and with the
Statement of Recommended Practice (the SORP) entitled "Financial Statements of
Investment Trust Companies and Venture Capital Trusts" which was issued in
January 2009.
The comparative figures are for the year, 1 January 2008 to 31 December 2008.
These financial statements have been prepared on the historical cost basis,
except for the measurement at fair value of investments.
(b) Valuation Of Investments
The Company's business is investing in financial assets with a view to profiting
from their total return in the form of income and capital growth. As set out in
the Prospectus all investments are designated at fair value.
Investee Companies
Unquoted investments including equity and loan investments are designated at
fair value and valued in accordance with the International Private Equity and
Venture Capital Guidelines and Financial Reporting Standard 26 "Financial
Instruments: Recognition and Measurement" (FRS 26). Investments are initially
recognised at fair value. The investments are subsequently re-measured at fair
value, as estimated by the Directors with prudence and good faith. Investment
holding gains or losses arising from the revaluation of investments are taken
directly to the income statement. Fair value is determined as follows:
- Fair value is the amount for which an asset could be exchanged
between knowledgeable, willing parties in an arm's length transaction.
- In estimating fair value for an investment, the Manager will apply
a methodology that is appropriate in the light of the nature, facts and
circumstances of the investment and its materiality in the context of the total
investment portfolio and will use reasonable assumptions and estimations.
- An appropriate methodology incorporates available information about
all factors that are likely to materially affect the fair value of the
investment. The valuation methodologies are applied consistently from period to
period, except where a change would result in a better estimate of fair value.
Any changes in valuation methodologies will be clearly disclosed in the
financial statements.
The most widely used methodologies are listed below. In assessing which
methodology is appropriate, the Directors are predisposed towards those
methodologies that draw upon market-based measures of risk and return.
- Price of recent investment
- Earnings multiple
- Net assets
- Available market prices
Of these the two methodologies most applicable to the Company's investments are:
1 - Price of recent investment.
Where the investment being valued was made recently, its cost will generally
provide a good indication of value. It is generally considered that this would
only apply for a limited period; in practice a period up to the start of the
first live event which forms the investment is often applied as the long stop
date for such a valuation.
2 - Discounted cash flows/earnings of the underlying business
Investments can be valued by calculating the net present value of expected
future cashflows of the Investee Companies. In relation to the Company's
investments, anticipating future cashflows in excess of the guaranteed amounts
would clearly require highly subjective judgements to be made in the early stage
of each investment and therefore would not be an appropriate methodology to
apply in the early stage of the investment.
In the period prior to the first live event it is considered appropriate to use
the price paid for the recent investment as the latest available information.
Thereafter, the portfolio of investments is fair valued on the discounted cash
flow/earnings basis using the latest available information on the performance of
the live event or entertainment content. Gains or losses arising from changes in
the fair value of the 'financial assets at fair value through profit or loss'
category are presented in the income statement in the period in which they
arise.
As a result of the above basis of valuation, there is significant judgement
associated with the valuation of investments.
Non-Qualifying Investments - Open Ended Investment Companies
The Company's non-qualifying investments in interest bearing money market open
ended investment companies (OEICs) are valued at fair value, this is bid price.
They have been designated as fair value through profit and loss for the purposes
of FRS 26.
Gains and losses arising from changes in fair value of qualifying and
non-qualifying investments are recognised as part of the capital return within
the income statement and allocated to the realised or unrealised capital reserve
as appropriate. Transaction costs attributable to the acquisition or disposal of
investments are charged to capital within the income statement.
(c) Investment Income
Interest income is recognised in the income statement as it accrues.
(d) Dividend Income
Dividend income is recognised in the income statement once it is declared by the
Investee Companies.
(e) Expenses
All expenses are accounted for on an accruals basis. Expenses are charged to the
revenue account within the income statement except that:
· expenses which are incidental to the acquisition or disposal of an
investment are charged to capital in the income statement as incurred; and
· expenses are split and presented partly as capital items where a
connection with the maintenance or enhancement of the value of the investments
held can be demonstrated.
(f) Deferred Taxation
Deferred taxation is recognised in respect of all timing differences that have
originated but not reversed at the balance sheet date where transactions or
events that result in an obligation to pay more, or a right to pay less, tax in
the future have occurred at the balance sheet date. This is subject to deferred
tax assets only being recognised if it is considered more likely than not that
there will be suitable profits from which the future reversal of the underlying
timing differences can be deducted. Timing differences are differences arising
between the Company's taxable profits and its results as stated in the financial
statements which are capable of reversal in one or more subsequent periods.
2. Investment Income
+----------------------+-------+---------------+---------+-------------------+
| | | | 2009 | 2008 |
+----------------------+-------+---------------+---------+-------------------+
| | | | GBP'000 | GBP'000 |
+----------------------+-------+---------------+---------+-------------------+
| Bank deposit | | | 5 | 8 |
| interest | | | | |
+----------------------+-------+---------------+---------+-------------------+
| Interest from OEICs | | | - | 76 |
+----------------------+-------+---------------+---------+-------------------+
| Dividend income from | | 11 | - |
| Qualifying Investments | | | |
+------------------------------+---------------+---------+-------------------+
| Loan note interest from Qualifying | 52 | - |
| Investments | | |
+----------------------------------------------+---------+-------------------+
| | | | 68 | 84 |
+----------------------+-------+---------------+---------+-------------------+
3. Investment Management Fee
+--------------------+---------+---------+---------+----------+---------+---------+---------+
| | 2009 | 2009 | 2009 | | 2008 | 2008 | 2008 |
+--------------------+---------+---------+---------+----------+---------+---------+---------+
| | Revenue | Capital | Total | | Revenue | Capital | Total |
+--------------------+---------+---------+---------+----------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | | GBP'000 | GBP'000 | GBP'000 |
+--------------------+---------+---------+---------+----------+---------+---------+---------+
| Investment | 89 | 89 | 178 | | 96 | 96 | 192 |
| management fee | | | | | | | |
+--------------------+---------+---------+---------+----------+---------+---------+---------+
| Reclaimed VAT | - | - | - | | (16) | (16) | (32) |
+--------------------+---------+---------+---------+----------+---------+---------+---------+
| | 89 | 89 | 178 | | 80 | 80 | 160 |
+--------------------+---------+---------+---------+----------+---------+---------+---------+
For the purposes of the revenue and capital columns in the income statement, the
management fee has been allocated 50% to revenue and 50% to capital, which
represents the split of the Company's long term returns.
4. Other Expenses
+---------------------+----------+-----------+-----------+----------+-------------+--------------+-------------+
| | 2009 | 2009 | 2009 | | 2008 | 2008 | 2008 |
+---------------------+----------+-----------+-----------+----------+-------------+--------------+-------------+
| | Revenue | Capital | Total | | Revenue | Capital | Total |
+---------------------+----------+-----------+-----------+----------+-------------+--------------+-------------+
| | GBP'000 | GBP'000 | GBP'000 | | GBP'000 | GBP'000 | GBP'000 |
+---------------------+----------+-----------+-----------+----------+-------------+--------------+-------------+
| Directors' | 31 | - | 31 | | 31 | - | 31 |
| remuneration | | | | | | | |
| (including | | | | | | | |
| employer's national | | | | | | | |
| insurance) | | | | | | | |
+---------------------+----------+-----------+-----------+----------+-------------+--------------+-------------+
| Auditors' | | | | | | | |
| remuneration | | | | | | | |
+---------------------+----------+-----------+-----------+----------+-------------+--------------+-------------+
| - Audit fees | 13 | - | 13 | | 11 | - | 11 |
+---------------------+----------+-----------+-----------+----------+-------------+--------------+-------------+
| Legal & | 5 | 8 | 13 | | 7 | 11 | 18 |
| professional fees | | | | | | | |
+---------------------+----------+-----------+-----------+----------+-------------+--------------+-------------+
| Other | 43 | 4 | 47 | | 45 | - | 45 |
| administration | | | | | | | |
| expense | | | | | | | |
+---------------------+----------+-----------+-----------+----------+-------------+--------------+-------------+
| Irrecoverable VAT | 13 | 1 | 14 | | 12 | 2 | 14 |
+---------------------+----------+-----------+-----------+----------+-------------+--------------+-------------+
| | 105 | 13 | 118 | | 106 | 13 | 119 |
+---------------------+----------+-----------+-----------+----------+-------------+--------------+-------------+
The Company is not registered for VAT. Fees payable to the Company's auditor
for the audit of the Company's financial statements are GBP13k excluding VAT.
Further details on the Directors' fee disclosures are given in the Directors'
Remuneration Report.
5. Tax Charge On Ordinary Activities
+---------------------+---------+---------+---------+----------+---------+---------+---------+
| | 2009 | 2009 | 2009 | | 2008 | 2008 | 2008 |
+---------------------+---------+---------+---------+----------+---------+---------+---------+
| | Revenue | Capital | Total | | Revenue | Capital | Total |
+---------------------+---------+---------+---------+----------+---------+---------+---------+
| | GBP'000 | GBP'000 | GBP'000 | | GBP'000 | GBP'000 | GBP'000 |
+---------------------+---------+---------+---------+----------+---------+---------+---------+
| Profit/(loss) on | (126) | 230 | 104 | | (178) | 211 | 33 |
| ordinary activities | | | | | | | |
| before tax | | | | | | | |
+---------------------+---------+---------+---------+----------+---------+---------+---------+
| Profit/(loss) on | (35) | 64 | 29 | | (51) | 60 | 9 |
| ordinary activities | | | | | | | |
| by tax rate 28% | | | | | | | |
| (2008: 28.5%) | | | | | | | |
+---------------------+---------+---------+---------+----------+---------+---------+---------+
| Adjustments: | | | | | | | |
+---------------------+---------+---------+---------+----------+---------+---------+---------+
| Non taxable gains | - | (93) | (93) | | - | (87) | (87) |
| on investments | | | | | | | |
+---------------------+---------+---------+---------+----------+---------+---------+---------+
| Disallowed expenses | - | 29 | 29 | | - | 27 | 27 |
+---------------------+---------+---------+---------+----------+---------+---------+---------+
| UK dividends not | (3) | - | (3) | | - | - | - |
| taxable | | | | | | | |
+---------------------+---------+---------+---------+----------+---------+---------+---------+
| Unutilised losses | 38 | - | 38 | | 51 | - | 51 |
| for the current | | | | | | | |
| year | | | | | | | |
+---------------------+---------+---------+---------+----------+---------+---------+---------+
| | - | - | - | | - | - | - |
+---------------------+---------+---------+---------+----------+---------+---------+---------+
As the Company is a VCT its capital gains are not taxable.
At 31 December 2009 the Company had surplus management expenses of GBP582k
(2008: GBP444k). A deferred tax asset has not been recognised in respect of
these surplus management expenses as the Company has only been investing for a
short period of time, and future taxable income can not be predicted with
reasonable certainty. Due to the Company's status as a VCT, and the intention to
continue meeting the conditions required to obtain approval in the foreseeable
future the Company does not recognise deferred tax on any capital gains or
losses which arise on the revaluation of investments.
6. Basic And Diluted Return Per Share
+-----------------+--------------+-----------+-----------+----------+--------------+-----------+-----------+
| | 2009 | 2009 | 2009 | | 2008 | 2008 | 2008 |
+-----------------+--------------+-----------+-----------+----------+--------------+-----------+-----------+
| | Revenue | Capital | Total | | Revenue | Capital | Total |
+-----------------+--------------+-----------+-----------+----------+--------------+-----------+-----------+
| | GBP'000 | GBP'000 | GBP'000 | | GBP'000 | GBP'000 | GBP'000 |
+-----------------+--------------+-----------+-----------+----------+--------------+-----------+-----------+
| Profit/(loss) | (126) | 230 | 104 | | (178) | 211 | 33 |
| on ordinary | | | | | | | |
| activities | | | | | | | |
| after taxation | | | | | | | |
+-----------------+--------------+-----------+-----------+----------+--------------+-----------+-----------+
| Weighted | 9,242,845 | 9,242,845 | 9,242,845 | | 9,242,845 | 9,242,845 | 9,242,845 |
| average shares | | | | | | | |
| in issue | | | | | | | |
| (number) | | | | | | | |
+-----------------+--------------+-----------+-----------+----------+--------------+-----------+-----------+
| Profit/(loss) | (1.4) | 2.5 | 1.1 | | (1.9) | 2.3 | 0.4 |
| attributable | | | | | | | |
| per share | | | | | | | |
| (pence) | | | | | | | |
+-----------------+--------------+-----------+-----------+----------+--------------+-----------+-----------+
There are no dilutive potential ordinary shares, including convertible
instruments, options or contingent share agreements in issue for the Company.
The basic return per share is therefore the same as the diluted return per
share.
7. Fixed Asset Investments
+--------------------+-----------+-------------------+---------+---------+
| | | | 2009 | 2008 |
+--------------------+-----------+-------------------+---------+---------+
| | | | GBP'000 | GBP'000 |
+--------------------+-----------+-------------------+---------+---------+
| Unquoted | | | 6,242 | 2,752 |
| investments | | | | |
+--------------------+-----------+-------------------+---------+---------+
| | | | | |
+--------------------+-----------+-------------------+---------+---------+
| Equity shares | | | 2,074 | 826 |
+--------------------+-----------+-------------------+---------+---------+
| Unsecured loan | | | 4,168 | 1,926 |
| notes | | | | |
+--------------------+-----------+-------------------+---------+---------+
| | | | 6,242 | 2,752 |
+--------------------+-----------+-------------------+---------+---------+
| | | | | |
+--------------------+-----------+-------------------+---------+---------+
| Qualifying | | | |
| Investments | | | |
+--------------------+-----------+-------------------+-------------------+
| | | | GBP'000 | GBP'000 |
+--------------------+-----------+-------------------+---------+---------+
| Opening valuation | | | 2,752 | 163 |
+--------------------+-----------+-------------------+---------+---------+
| Fair value | | | 287 | - |
| adjustment | | | | |
+--------------------+-----------+-------------------+---------+---------+
| Purchases at cost | | | 3,203 | 2,589 |
+--------------------+-----------+-------------------+---------+---------+
| Closing valuation | | 6,242 | 2,752 |
+--------------------+-----------+-------------------+---------+---------+
8. Significant Interests
The Company has interests of greater than 10% of the nominal value of the
allotted shares in the following Investee Companies incorporated in the United
Kingdom as at 31 December 2009:
+------------------------------+----+-------------+----------------+
| Trading Companies | | % class and | % voting |
| | | share type | rights |
+------------------------------+----+-------------+----------------+
| Sounds Alive Limited | | 50.00% A | 50.00% |
| | | Ordinary | |
+------------------------------+----+-------------+----------------+
| Annie Films Limited | | 24.95% A | 24.95% |
| | | Ordinary | |
+------------------------------+----+-------------+----------------+
| Aurem Limited | | 24.95% A | 24.95% |
| | | Ordinary | |
+------------------------------+----+-------------+----------------+
| Brand Events Live Limited | | 24.95% A | 24.95% |
| | | Ordinary | |
+------------------------------+----+-------------+----------------+
| CFDT Limited | | 24.95% A | 24.95% |
| | | Ordinary | |
+------------------------------+----+-------------+----------------+
| IR Productions Limited | | 24.95% A | 24.95% |
| | | Ordinary | |
+------------------------------+----+-------------+----------------+
| Jetstream Events Limited | | 24.95% A | 24.95% |
| | | Ordinary | |
+------------------------------+----+-------------+----------------+
| Taste Xmas Live Limited | | 24.95% A | 24.95% |
| | | Ordinary | |
+------------------------------+----+-------------+----------------+
| Dance Floor Limited | | 12.48% A | 12.48% |
| | | Ordinary | |
+------------------------------+----+-------------+----------------+
| Golfmania Limited | | 12.48% A | 12.48% |
| | | Ordinary | |
+------------------------------+----+-------------+----------------+
| Into The Groove Limited | | 12.48% A | 12.48% |
| | | Ordinary | |
+------------------------------+----+-------------+----------------+
The investments made by the Company are part of its portfolio of investments and
the table above includes all portfolio investments. As a VCT, the Company values
those investments at fair value in accordance with FRS 26.
9. Debtors
+----------------------+-------+--------+---------------+---------+
| | | | 2009 | 2008 |
+----------------------+-------+--------+---------------+---------+
| | | | GBP'000 | GBP'000 |
+----------------------+-------+--------+---------------+---------+
| Prepayments and accrued | | 68 | 6 |
| income | | | |
+----------------------+-------+--------+---------------+---------+
10. Current Asset Investments
+-----------------------+-------+--------+--------------+--------------+
| | | | 2009 | 2008 |
+-----------------------+-------+--------+--------------+--------------+
| | | | GBP'000 | GBP'000 |
+-----------------------+-------+--------+--------------+--------------+
| Funds held in listed money market | 2,598 | 6,045 |
| instruments | | |
+-----------------------+-------+--------+--------------+--------------+
+-------------------------+---------+----------+--------------+---------+
| Non-Qualifying | | | |
| Investments | | | |
+-------------------------+---------+----------+------------------------+
| | | | GBP'000 | GBP'000 |
+-------------------------+---------+----------+--------------+---------+
| Opening valuation | | | 6,045 | 8,514 |
+-------------------------+---------+----------+--------------+---------+
| Purchases at cost | | | - | 2,536 |
+-------------------------+---------+----------+--------------+---------+
| Disposal proceeds | | | (3,492) | (5,233) |
+-------------------------+---------+----------+--------------+---------+
| Realised gains on disposal | | 154 | 87 |
+-----------------------------------+----------+--------------+---------+
| Unrealised change in value of | | (109) | 141 |
| investment | | | |
+-----------------------------------+----------+--------------+---------+
| Closing valuation | 2,598 | 6,045 |
+-------------------------+---------+----------+--------------+---------+
In order to safeguard the capital available for investment in Qualifying
Investments and balance this with the need to provide good returns to investors,
available funds from the net proceeds are invested in appropriate securities
(money market securities and cash funds) until required for Qualifying
Investment purposes.
11. Creditors: Amounts Falling Due Within One Year
+------------------------+---------+----------+----------------+---------+
| | | | 2009 | 2008 |
+------------------------+---------+----------+----------------+---------+
| | | | GBP'000 | GBP'000 |
+------------------------+---------+----------+----------------+---------+
| Trade creditors | | | 7 | - |
+------------------------+---------+----------+----------------+---------+
| Accruals and deferred | | | 21 | 26 |
| income | | | | |
+------------------------+---------+----------+----------------+---------+
| | | | 28 | 26 |
+------------------------+---------+----------+----------------+---------+
12. Called-Up Share Capital
+--------------------------+---------+----------+------------+---------+
| | | | 2009 | 2008 |
+--------------------------+---------+----------+------------+---------+
| Authorised | | | GBP'000 | GBP'000 |
+--------------------------+---------+----------+------------+---------+
| 35,000,000 ordinary shares 1p each | | 350 | 350 |
+------------------------------------+----------+------------+---------+
| | | | | |
+--------------------------+---------+----------+------------+---------+
| Allotted, called-up and | | | GBP'000 | GBP'000 |
| fully paid | | | | |
+--------------------------+---------+----------+------------+---------+
| 9,242,845 ordinary shares 1p each | | 92 | 92 |
+--------------------------+---------+----------+------------+---------+
The entire issued ordinary share capital of the Company has been admitted to the
official list maintained by the Financial Services Authority and to trading on
the London Stock Exchange.
13. Reserves
+------------------------+----------+---------+---------+---------+---------+----------+
| | | Share | Other | Capital | Revenue | Total |
| | | premium | reserve | reserve | reserve | reserves |
+------------------------+----------+---------+---------+---------+---------+----------+
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
+------------------------+----------+---------+---------+---------+---------+----------+
| At 1 January 2009 | | 4,383 | 4,382 | 386 | (374) | 8,777 |
+------------------------+----------+---------+---------+---------+---------+----------+
| Gain on disposal of | | - | - | 154 | - | 154 |
| investments | | | | | | |
+------------------------+----------+---------+---------+---------+---------+----------+
| Increase in fair value of | - | - | 178 | - | 178 |
| investments held | | | | | |
+-----------------------------------+---------+---------+---------+---------+----------+
| Investment income | | - | - | - | 68 | 68 |
+------------------------+----------+---------+---------+---------+---------+----------+
| Investment management | | - | - | (89) | (89) | (178) |
| fees | | | | | | |
+------------------------+----------+---------+---------+---------+---------+----------+
| Other expenses | | - | - | (13) | (105) | (118) |
+------------------------+----------+---------+---------+---------+---------+----------+
| At 31 December 2009 | | 4,383 | 4,382 | 616 | (500) | 8,881 |
+------------------------+----------+---------+---------+---------+---------+----------+
The capital reserve includes realised investment holding gains of GBP111k and
unrealised investment holding gains of GBP505k.
As an investment company under section 833 of the Companies Act 2006, the other
reserve account is the only distributable reserve of the Company.
14. Net Asset Value Per Share
+-----------+-----------+------------+----------+---------------+------------------+
| | | | | 2009 | 2008 |
+-----------+-----------+------------+----------+---------------+------------------+
| Net assets attributable to | | 8,973 | 8,869 |
| shareholders (GBP'000) | | | |
+------------------------------------+----------+---------------+------------------+
| Shares in issue (number) | | 9,242,845 | 9,242,845 |
+------------------------------------+----------+---------------+------------------+
| Net asset value per share (pence) | 97.1 | 96.0 |
+-----------+-----------+------------+----------+---------------+------------------+
15. Financial Instruments And Risk Management
The Company's financial instruments comprise equity and floating rate debt
investments in unquoted companies, cash balances and listed money market
instruments. The Company holds financial assets in accordance with its
investment policy.
Fixed asset investments (see note 7) are valued at fair value. For quoted
securities included in current asset non-qualifying investments, this is bid
price. In respect of unquoted investments, these are fair valued in accordance
with the International Private Equity and Venture Capital Valuation Guidelines.
The fair value of all other financial assets and liabilities is represented by
their carrying value on the balance sheet.
Fair Value Hierarchy
+------------+-----------+------------+-------------+--------------------+---------+
| | | | | 2009 | 2008 |
+------------+-----------+------------+-------------+--------------------+---------+
| | | GBP'000 | GBP'000 |
+-------------------------------------+-------------+--------------------+---------+
| Listed money market instruments | Level 1 | 2,598 | 6,045 |
| (note 10) | | | |
+-------------------------------------+-------------+--------------------+---------+
| Unquoted investments (note 7) | Level 3 | 6,242 | 2,752 |
+-------------------------------------+-------------+--------------------+---------+
| | | 8,840 | 8,797 |
+------------+-----------+------------+-------------+--------------------+---------+
The level 3 investments include net fair value gains of GBP287k in the current
year (2008: nil), as disclosed in note 7.
In accordance with Financial Reporting Standard 29 'Financial Instruments:
Disclosures', the above table provides an analysis of these investments based on
the fair value hierarchy described below which reflects the reliability and
significance of the information used to measure their fair value:
· Level 1 - investments with quoted prices in active markets;
· Level 2 - investments whose fair value is based directly on observable
market prices or is indirectly drawn from observable market prices; and
· Level 3 - investments whose fair value is determined using a valuation
technique based on assumptions that are not supported by observable current
market prices or are not based on observable market data.
The valuation techniques used by the Company are explained in note 1 on
accounting policies.
The Company's investing activities expose it to various types of risk that are
associated with the financial instruments and markets in which it invests. The
most important types of financial risk to which the Company is exposed are:
· Market risk;
· Interest rate risk;
· Credit risk; and
· Liquidity risk.
The nature and extent of the financial instruments outstanding at the balance
sheet date and the risk management policies employed by the Company are
discussed below:
a) Market Risk
Market risk embodies the potential for both losses and gains and includes
interest rate risk and price risk.
The Company's strategy on the management of investment risk is driven by the
Company's investment objective. Investments in unquoted companies, by their
nature, involve a higher degree of risk than investments in larger "blue chip"
companies.
The risk of loss in value is managed through careful selection in accordance
with a formalised investment decision process, with each investment proposal
evaluated by the investment committee as part of the due diligence stage. The
Company's investment policy can be found in the Business Review. The risk is
also managed through continuous monitoring of the performance of investments and
changes in their risk profile.
b) Interest Rate Risk
Some of the Company's financial assets are interest bearing, all of which are at
floating rates. As a result, the Company has exposure to interest rate risk due
to fluctuations in the prevailing levels of market interest rate.
When the Company retains cash balances, the majority of cash is held within
interest bearing money market open ended investment companies (OEICs). This is
the Non-Qualifying Investments amount on the Balance Sheet being GBP2,598k
(2008: GBP6,045k). The benchmark rate which determines the interest payments
received on interest bearing cash balances and debt investments in unquoted
companies is the bank base rate which was 0.5% as at 31 December 2009 (31
December 2008: 2%).
The following table illustrates the sensitivity of the impact on ordinary
activities for the year before taxation and total equity to a change in interest
rates of 50 basis points, with effect from the beginning of the year. These
changes are considered to be reasonably possible based on observation of current
market conditions. The calculations are based on the Company's Non-qualifying
investments held at each balance date. All other variables are held constant.
+--------------------+----------+------------+--+-------------+-------------+
| | | | | 31 December | 31 December |
| | | | | 2009 | 2008 |
+--------------------+----------+------------+--+-------------+-------------+
| | | | | GBP '000 | GBP '000 |
+--------------------+----------+------------+--+-------------+-------------+
| | | +/- 50 | +/- 50 |
| | | basis | basis |
| | | points | points |
+--------------------------------------------+--+-------------+-------------+
| Impact on profit/(loss) on ordinary | | | |
| activities for the year | | | |
+--------------------------------------------+--+-------------+-------------+
| before taxation and total equity | | 14 | 30 |
+--------------------+----------+------------+--+-------------+-------------+
c) Credit Risk
Credit risk is the risk that a counterparty to a financial instrument will fail
to discharge an obligation or commitment that it has entered into with the
Company.
Whilst the Company is exposed to credit risk due to its GBP4,168k (2008:
GBP1,926k) unsecured loan note instruments, this risk is mitigated by the
Company requiring that minimum royalty arrangements are in place prior to the
investment as set out in the Company's investment policy. In addition, and in
accordance with the Company's monitoring procedure, the Manager closely monitors
progress (including financial expenditure) against the Investee Companies'
agreed business plans.
The GBP4,168k (2008: GBP1,926k) unsecured loan notes are the contractually
agreed 70% of initial investments.
d) Liquidity Risk
The Company's financial instruments include equity and debt investments in
unquoted companies, which are not traded in an organised public market and which
generally may be illiquid. As a result, the Company may not be able to liquidate
quickly some of its investment in these instruments at an amount close to fair
value.
The Company maintains sufficient reserves of cash and readily realisable
marketable securities to meet its liquidity requirements at all times. No
numerical disclosures have been provided in respect of liquidity risk as this is
not considered to be material.
16. Contingencies, Guarantees And Financial Commitments
There is currently interest income accruing on the unsecured loan note
instruments at a rate of 1.5%, being 1% over the bank base rate which was 0.5%
as at 31 December 2009 (2008: 2.0%), totalling GBP47k (2008: GBP48k). The
repayment of this interest is not deemed recoverable based on current profits
being derived by the Investee Companies, which currently can not be determined
with any certainty, therefore the Directors have not recognised it in the
financial statements.
17. Related Party Transactions
a. Ingenious Ventures Limited was the Manager until 28 February 2008, when
the investment management agreement was novated to Ingenious Asset Management
Limited, and Ingenious Ventures became a trading division of Ingenious Asset
Management Limited. Patrick McKenna is a director of Ingenious Asset Management
Limited and was a director of Ingenious Ventures Limited until 1 June 2009,
which are both wholly owned subsidiaries within the Ingenious Group, which is
controlled by Patrick McKenna.
Ingenious Ventures (the manager), in accordance with the management agreement,
receives a management fee of 0.5% of the net asset value payable quarterly in
advance. The manager also charges an administration fee of GBP18k per annum and
irrecoverable VAT.
b. The funds invested in OEICs, are managed by Ingenious Asset Management
Limited, a company of which Patrick McKenna is a director. Ingenious Asset
Management Limited is a wholly owned subsidiary of Ingenious Media Limited which
is controlled by Patrick McKenna. There is no fee associated with this
transaction.
c. Patrick McKenna is a director and a shareholder of Ingenious Live VCT 1
plc, Ingenious Entertainment VCT 1 plc and Ingenious Entertainment VCT 2 plc.
Andrew Morris is a director and a shareholder of Ingenious Live VCT 1 plc. The
Company, Ingenious Live VCT 1 plc, Ingenious Entertainment VCT 1 plc and
Ingenious Entertainment VCT 2 plc have jointly agreed with Brand Events Limited
to form a new company, Golfmania Limited, to co-promote O2 Golf Live in the UK.
During the year the Company invested GBP275,000 for a total of 12.475% of the
equity in Golfmania Limited. Ingenious Live VCT 1 plc, Ingenious Entertainment
VCT 1 plc and Ingenious Entertainment VCT 2 plc each invested GBP275,000 for
12.475% of the equity in Golfmania Limited. Brand Events Limited holds 49.9% of
the equity in Golfmania Limited. Brand Events Limited is a subsidiary of Brand
Events Holdings Limited which is a subsidiary of Ingenious Media Active Capital
Limited ("IMAC"), a company of which Patrick McKenna is a director. Ingenious
Media Limited, a company which is controlled by Patrick McKenna, is also a
shareholder of IMAC. Andrew Morris is a director and shareholder of Brand Events
Holdings Limited. Ingenious Ventures is also the manager of IMAC.
d. Patrick McKenna and Andrew Morris are directors and shareholders of
Ingenious Live VCT 1 plc. The Company and Ingenious Live VCT 1 plc have jointly
agreed with Brand Events Limited to form a new company, Brand Events Live
Limited, to co-promote the Taste Festival in London. During the year the
Company invested GBP1,000,000 for a total of 24.95% of the equity in Brand
Events Live Limited. Ingenious Live VCT 1 plc invested GBP1,000,000 for 24.95%
of the equity in Brand Events Live Limited. Brand Events Limited holds 49.9% of
the equity in Brand Events Live Limited. Brand Events Limited is a subsidiary of
Brand Events Holdings Limited which is a subsidiary of Ingenious Media Active
Capital Limited ("IMAC"), a company of which Patrick McKenna is a director.
Ingenious Media Limited, a company which is controlled by Patrick McKenna, is
also a shareholder of IMAC. Andrew Morris is a director and shareholder of Brand
Events Holdings Limited. Ingenious Ventures is also the manager of IMAC.
e. Patrick McKenna and Andrew Morris are directors and shareholders of
Ingenious Live VCT 1 plc. The Company and Ingenious Live VCT 1 plc formed a new
company, Taste Xmas Live Limited, with Brand Events Limited, to co-promote the
Taste of Christmas in London. In September 2008 the Company invested GBP902,488
for a total of 24.95% of the equity in Taste Xmas Live Limited. Ingenious Live
VCT 1 plc invested GBP902,488 for 24.95% of the equity in Taste Xmas Live
Limited. Brand Events Limited holds 49.9% of the equity in Taste Xmas Live
Limited. Brand Events Limited is a subsidiary of Brand Events Holdings Limited
which is a subsidiary of Ingenious Media Active Capital Limited ("IMAC"), a
company of which Patrick McKenna is a director. Ingenious Media Limited, a
company which is controlled by Patrick McKenna, is also a shareholder of IMAC.
Andrew Morris is a director and shareholder of Brand Events Holdings Limited.
Ingenious Ventures is also the manager of IMAC.
f. Patrick McKenna is a director and a shareholder of Ingenious Live VCT 1
plc, Ingenious Entertainment VCT 1 plc and Ingenious Entertainment VCT 2 plc.
The Company, Ingenious Live VCT 1 plc, Ingenious Entertainment VCT 1 plc and
Ingenious Entertainment VCT 2 plc have jointly agreed with Whizz Kid
Entertainment Limited to form a new company, Dance Floor Limited, to co-produce
Let's Dance. During the year the Company invested GBP500,000 for a total of
12.475% of the equity in Dance Floor Limited. Ingenious Live VCT 1 plc,
Ingenious Entertainment VCT 1 plc and Ingenious Entertainment VCT 2 plc each
invested GBP500,000 for 12.475% of the equity in Dance Floor Limited. Whizz Kid
Entertainment Limited holds 49.9% of the equity in Dance Floor Limited. Whizz
Kid Entertainment Limited is a subsidiary of Ingenious Media Active Capital
Limited ("IMAC"), a company of which Patrick McKenna is a director. Ingenious
Media Limited, a company which is controlled by Patrick McKenna, is also a
shareholder of IMAC. Ingenious Ventures is also the manager of IMAC.
g. Patrick McKenna is a director and a shareholder of Ingenious Live VCT 1
plc, Ingenious Entertainment VCT 1 plc and Ingenious Entertainment VCT 2 plc.
The Company, Ingenious Live VCT 1 plc, Ingenious Entertainment VCT 1 plc and
Ingenious Entertainment VCT 2 plc formed a new company, Into The Groove Limited,
to co-promote 80's Rewind. In December 2008 the Company invested GBP272,598 for
a total of 12.475% of the equity in Into The Groove Limited. Ingenious Live VCT
1 plc, Ingenious Entertainment VCT 1 plc and Ingenious Entertainment VCT 2 plc
each invested GBP272,598 for 12.475% of the equity in Into The Groove Limited.
h. Patrick McKenna is a director and a shareholder of Ingenious Live VCT 1
plc. The Company and Ingenious Live VCT 1 plc formed a new company, Aurem
Limited, to co-promote Underage and Field Day Festivals. During the year the
Company invested a total of GBP175,000 in Aurem Limited bringing the total
investment to GBP500,000 which represents 24.95% of the equity in Aurem Limited.
Ingenious Live VCT 1 plc invested a total of GBP175,000 in Aurem Limited
bringing the total investment to GBP500,000 which represents 24.95% of the
equity in Aurem Limited.
i. Patrick McKenna is a director and a shareholder of Ingenious Live VCT 1
plc. The Company and Ingenious Live VCT 1 plc formed a new company, CFDT
Limited, to co-promote Creamfields day two. In July 2008 the Company invested a
total of GBP850,000 for 24.95% of the equity in CFDT Limited. Ingenious Live VCT
1 plc invested GBP850,000 for 24.95% of the equity in CFDT Limited. C.I. Events
Limited holds 49.9% of the equity in CFDT Limited. C.I. Events Limited is a
wholly owned subsidiary of Cream Holdings Limited which is 46.9% owned by
Ingenious Ventures Limited Partnership. Ingenious Ventures Limited Partnership
is 90% owned by Ingenious Media Active Capital Limited ("IMAC"), a company of
which Patrick McKenna is a director. Ingenious Media Limited, a company which is
controlled by Patrick McKenna, is also a shareholder of IMAC and owns the
remaining 10% in Ingenious Ventures Limited Partnership. Ingenious Ventures is
also the manager of IMAC.
j. Patrick McKenna is a director and a shareholder of Ingenious Live VCT 1
plc. The Company and Ingenious Live VCT 1 plc formed a new company, IR
Productions Limited, to co-promote a music festival at Powderham Castle. In
January 2008 the Company invested a total of GBP402,100 for 24.95% of the equity
in IR Productions Limited. Ingenious Live VCT 1 plc invested GBP402,100 for
24.95% of the equity in IR Productions Limited.
k. Patrick McKenna is a director and a shareholder of Ingenious Live VCT 1
plc. The Company and Ingenious Live VCT 1 plc have jointly agreed to form a new
company, Annie Films Limited, to co-produce Annie Get Your Gun at the Young Vic.
During the year the Company invested a total of GBP252,500 for 24.95% of the
equity in Annie Films Limited. Ingenious Live VCT 1 plc invested GBP252,500 for
24.95% of the equity in Annie Films Limited. Patrick McKenna is a director and
chairman of the Young Vic Company.
l. Patrick McKenna and Paul Gregg are directors and shareholders of
Ingenious Live VCT 1 plc. The Company and Ingenious Live VCT 1 plc have jointly
agreed to form a new company, Jetstream Events Limited, to co-promote events at
the open air theatre in Scarborough. During the year the Company invested a
total of GBP1,000,000 for 24.95% of the equity in Jetstream Events Limited.
Ingenious Live VCT 1 plc invested GBP1,000,000 for 24.95% of the equity in
Jetstream Events Limited. The event is co-promoted with Apollo Resorts and
Leisure Scarborough Limited. Apollo Resorts and Leisure Scarborough Limited is a
wholly owned subsidiary of Apollo Resorts and Leisure Limited. Paul Gregg is a
director and shareholder of Apollo Resorts and Leisure Limited.
m. Patrick McKenna is a director and chairman of The Young Vic Company (a
registered charity) which holds 0.2% of the equity of Golfmania Limited, Brand
Events Live Limited, Taste Xmas Live Limited, Dance Floor Limited, Into The
Groove Limited, Aurem Limited, CFDT Limited, IR Productions Limited, Annie Films
Limited and Jetstream Events Limited.
During the Reporting Period the Company has carried out a number of transactions
with the above-mentioned related parties in the normal course of the business
and on an arm's length basis:
+----------------------+------+-------------+---------+-------------------+---------+
| | | 2009 | 2009 | 2008 | 2008 |
+----------------------+------+-------------+---------+-------------------+---------+
| Entity |Note | Expenditure | Amounts | Expenditure | Amounts |
| | | paid | due | paid/(receivable) | due |
| | | GBP'000 | GBP'000 | GBP'000 | GBP'000 |
| | | | | | |
+----------------------+------+-------------+---------+-------------------+---------+
| Ingenious Ventures | | | | | |
| Limited | | | | | |
+----------------------+------+-------------+---------+-------------------+---------+
| - Investment | a | - | - | 52 | - |
| management fee | | | | | |
+----------------------+------+-------------+---------+-------------------+---------+
| - | a | - | - | 5 | - |
| Administration fee | | | | | |
+----------------------+------+-------------+---------+-------------------+---------+
| - VAT reclaimed | a | - | - | (26) | - |
| on Management | | | | | |
| and | | | | | |
| Administration fee | | | | | |
+----------------------+------+-------------+---------+-------------------+---------+
| Ingenious Asset | | | | |
| Management Limited | | | | |
+-----------------------------+-------------+---------+-------------------+---------+
| - Investment | a | 178 | - | 140 | - |
| management fee | | | | | |
+----------------------+------+-------------+---------+-------------------+---------+
| - | a | 18 | - | 14 | - |
| Administration fee | | | | | |
+----------------------+------+-------------+---------+-------------------+---------+
| - Irrecoverable | a | 8 | 3 | - | - |
| VAT | | | | | |
+----------------------+------+-------------+---------+-------------------+---------+
| - VAT reclaimed | a | - | - | (8) | - |
| on Management | | | | | |
| and | | | | | |
| Administration fee | | | | | |
+----------------------+------+-------------+---------+-------------------+---------+
Transactions Between Related Parties
a. Ingenious Media Consulting Limited, a company of which Patrick McKenna
was a director during the year and which is a wholly owned subsidiary in the
Ingenious Group, which is controlled by Patrick McKenna, has entered into
consultancy agreements with each of the Investee Companies to provide management
services. For the provision of such services, consulting fees totalling GBP242k
including VAT (2008: GBP151k) have been invoiced in the year, GBP39k of which
remains outstanding as at 31 December 2009 (2008: GBP10k).
18. Events After The Balance Sheet Date
a. The Company invested a further GBP74k in Into The Groove Limited on 27
January 2010.
b. IR Productions Limited repaid GBP74k of unsecured loan notes on 29 January
2010.
c. The Company declared an interim dividend of 7.0 pence per ordinary share
on 22 March 2010. It has been proposed that the dividend is paid on 13 April
2010.
19. Capital Management
The capital management objectives of the Company are:
· To safeguard its ability to continue as a going concern so that it can
continue to provide returns to shareholders.
· To ensure sufficient liquid resources are available to meet the funding
requirements of its investments and to fund new investments where identified.
The Company has no external debt; consequently all capital is represented by the
value of share capital, distributable and other reserves. Total shareholder
equity at 31 December 2009 was GBP8,973k (2008: GBP8,869k).
In order to maintain or adjust its capital structure the Company may adjust the
amount of dividends paid to the Shareholders, return capital to Shareholders,
issue new shares or sell assets.
There have been no changes to the
capital management objectives or the capital structure of the business from the
previous period.
The Company is subject to the following externally imposed capital requirements:
· As a public company Ingenious Live VCT 2 plc must have a minimum of
GBP50k of share capital.
The level of dividends may be influenced by the need to comply with the VCT
legislation which states that no more than 15% of income from shares and
securities may be retained.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR GMGGDNMVGGZM
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